Jack Dorsey’s Twitter stock buy: PR or true confidence?

San Francisco-based Twitter’s stock has plunged since its all-time high of $73.31, and several of the company’s key executives have recently purchased more shares. Are they showing confidence in the firm’s future, or just trying to boost public opinion?

San Francisco-based Twitter’s stock has plunged since its...

When top execs buy up a bunch of their company’s stock, does it show desperation or confidence?

That question emerged Monday when Twitter interim CEO and co-founder Jack Dorsey swooped in while his company’s battered stock was at a nadir to buy 31,000 shares for $875,000. “Investing in Twitter’s future,” he tweeted.

Three other insiders — CFO Anthony Noto, board member Peter Currie and venture capitalist/board member Peter Fenton — plunked down $200,000 to $250,000 each in similar buying sprees on Friday and Monday.

The moves seemed to soothe jittery investors. Twitter shares rose $2.46 or 9.1 percent to $29.50 on Monday — admittedly a day when the stock market was on an upswing. Twitter’s $27.04 close on Friday was the lowest since its November 2013 market debut. Its high of $73.31 came about two months after its initial public offering.

But critics pointed out that the exec buys may reflect nothing more than calculated PR to shore up public opinion.

“It’s window dressing,” said Ross Gerber, CEO of Gerber Kawasaki Wealth Management. “They’re trying to show they’re supporting the company now that it’s lost shareholders 50 percent of their value.”

Dorsey and Noto bear some responsibility for that plunge. Twitter stock was already bruised and the company was reeling from executive shuffles when the board brought back Dorsey in early summer as a temporary replacement for ousted CEO Dick Costolo. But in late July, Dorsey and Noto further spooked investors with frank talk about how Twitter was failing to attract enough new users, remains too difficult to use and needs a turnaround.

Photo: Richard Drew, Associated Press

Jack Dorsey, Twitter interim
CEO and co-founder, just bought 31,000 shares of the company’s stock as an investment “in Twitter’s future.” But some critics think it’s only a PR to shore up public opinion.

Jack Dorsey, Twitter interim
CEO and co-founder, just bought...

Dorsey is interested in becoming permanent Twitter CEO, according to some press reports. He is still CEO of another company he co-founded, Square, which is close to going public.

Monday’s buy was chump change for Dorsey, whose net worth tops $2.2 billion. And he’s sold much more Twitter stock in recent months, offloading 379,000 shares since November. Meanwhile, Twitter co-founder and board member Evan Williams, its largest shareholder, sold 372,000 shares last week, bringing his total Twitter sales since May to more than 1 million shares. Williams had a fixed schedule for selling Twitter stock, something execs often do to avoid criticism of inappropriate timing.

“It’s unfair to expect everyone to have all their money in one basket,” said Steven Davidoff Solomon, a law professor at UC Berkeley. “From Bill Gates on down, founders sell all the times. The real question is whether they’re selling to leave or selling to diversify.”

Solomon doesn’t share the market’s downbeat views on Twitter.

“Twitter is one of the few marquee properties on the Internet,” he said. “It has monetization issues, but so does Snapchat.”

As for Dorsey, “It’s hard to get excited about less than $1 million, but it’s a sign of his commitment,” Solomon said. “It may be a token, but it’s better than nothing.”

While Twitter insiders’ buys are admittedly symbolic, they still are positive, said David Larcker, director of the Corporate Governance Research Initiative at the Stanford Graduate School of Business.

“It’s a bonding, ‘we’re in this together’ gesture, one that shareholders appreciate,” he said. “It certainly got picked up in the news.”

Gerber remains bullish on Twitter personally even though his Santa Monica firm unloaded its Twitter holdings a couple of months ago once it fell into the $30 range, because its strategy calls for selling stocks that decline too precipitously.